Trump’s Tariffs Send Shockwaves Through Global Economy Amid Rising Uncertainty

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: REUTERS/Sarah Meyssonnier

As the Trump administration continues to wield tariffs as a key instrument of trade policy, the fallout is beginning to reverberate across global markets, industries, and national economies, with mounting evidence that uncertainty itself is now a critical drag on economic performance.

Multinational corporations and small e-commerce businesses alike have issued profit warnings, initiated job cuts, and revised strategic plans in response to escalating tariff barriers and a murky outlook on international trade. Economic forecasters across multiple regions are slashing growth expectations as a result.

“U.S. tariff policy is a serious negative shock for the world in the near term,” said Isabelle Mateos y Lago, chief economist at BNP Paribas. She warned that the ultimate scope of U.S. tariffs “may be further away and at a higher level than previously thought.”

Current U.S. tariffs start at a 10% baseline but include significantly higher sector-specific rates such as 25% on steel and aluminum, and up to 145% on select goods from China. Beijing, in turn, has retaliated with 125% levies on American products and is now considering a new offer from Washington to resume negotiations.

While hopes remain that President Donald Trump will eventually strike deals to ease trade tensions with countries like China, Japan, India, and South Korea, the prolonged uncertainty has already had wide-ranging consequences.

Swedish appliance maker Electrolux, automaker Volvo Cars, electronics firm Logitech, and beverage giant Diageo have all abandoned earnings targets, citing the unpredictability of trade conditions. The recent removal of the “de minimis” duty-free threshold for e-commerce imports under $800 from China was particularly damaging to small and mid-sized businesses, many of which are now exiting the U.S. market entirely.

“We’re going from zero to 145%, which is really untenable for companies and untenable for customers,” said Cindy Allen, CEO of the global trade consultancy Trade Force Multiplier.

The economic ripple effect is evident in downgraded growth forecasts by institutions like the Bank of Japan and in regions including the Netherlands and the Middle East and North Africa (MENA). Manufacturing sentiment, a leading economic indicator, is also deteriorating.

China’s factory activity contracted in April at its fastest rate in 16 months. The UK reported its steepest decline in factory exports in nearly five years, while a temporary spike in German manufacturing may reflect efforts to ship products ahead of incoming tariffs.

“This could mean a sharp drop in coming months,” warned Cyrus de la Rubia, chief economist at Hamburg Commercial Bank AG.

One potential beneficiary in the reshuffling of global trade is India, which saw a 10-month high in manufacturing activity in April. With U.S. tariffs primarily targeting China, American firms like Apple are shifting portions of their supply chains to India, boosting its appeal as an alternative production hub.

“India is well positioned to be an alternative to China as a supplier of goods to the U.S.,” said Shilan Shah, emerging markets economist at Capital Economics.

While tariffs are expected to act as a short-term demand shock by raising prices for American consumers and businesses, economists suggest a silver lining may emerge. The dampening effect on inflation could give central banks room to ease monetary policy such as expected interest rate cuts from the Bank of England this week.

The broader question remains whether Trump's aggressive trade stance will lead to structural reforms elsewhere such as renewed Chinese domestic stimulus or deeper economic integration in the eurozone.

For now, the world economy remains caught in the crosshairs of an unpredictable tariff war, with both immediate and long-term consequences still unfolding.